HOUSTON, Oct. 31, 2007 (PRIME NEWSWIRE) -- Horizon Offshore, Inc. (Nasdaq:HOFF) today reported quarterly results for the third quarter of 2007.
Summary of Results
(Unaudited)
(In thousands, except per share data and percentages)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
--------------------------------------
Contract revenues $147,778 $143,733 $351,844 $430,618
Gross profit 36,542 39,130 50,650 116,807
Margin 24.7% 27.2% 14.4% 27.1%
Operating income 28,627 30,812 26,639 87,008
Net income 18,874 20,866 14,908 53,207
Diluted earnings per
share 0.58 0.64 0.46 1.72
Adjusted EBITDA 36,374 40,520 48,135 99,843
The Company's revenues and gross profit for the third quarter of 2007 reflect strong results in its domestic geographic segment due primarily to the work on a significant project in the Northeastern U.S. for the installation, burial and testing of several pipelines along with the associated tie-ins to service the Northeast Gateway Deepwater Port offshore Massachusetts. The pipeline installation and burial portions of the project were completed utilizing the Atlantic Horizon and the Lonestar Horizon during the third quarter of 2007. The Texas Horizon, a dive support vessel, mobilized during August 2007 to complete the final stages of the construction portion of the project. This project began in May 2007 and is expected to be completed in November 2007. Also, contributing to strong domestic revenues and gross profit for the third quarter of 2007 is the Company's work in the U.S. Gulf of Mexico related to recovery and removal of damaged pipe as well as several platform installations.
In its Southeast Asia/Mediterranean geographic segment, the Company's combination barge, the Sea Horizon, was 100% utilized on a charter during the third quarter of 2007, which is expected to last through November 2007. The full utilization of this barge produced strong operating results in Southeast Asia.
Most of the Company's revenues and gross profit in Latin America were derived from a project that it performed and completed during the third quarter of 2007 as a subcontractor offshore Veracruz, Mexico in the Marsopa field. The contractor's customer for this project was Petroleos Mexicanos ("Pemex"). The gross profit recognized on this project, however, was offset by losses on the Company's two projects for Pemex offshore Mexico. The Company continued to incur delays in completing these two projects due to adverse weather conditions and poor diving subcontractor productivity and as a result, recognized additional losses of approximately $(15.1) million during the quarter ending September 30, 2007. The Company completed one of the two projects during October 2007 and is near completion on the second.
In West Africa, the Company incurred additional costs for the completion of the shore approaches of the lateral lines of the West Africa Gas Pipeline project and recognized additional losses of $(1.9) million for the third quarter. The Company has completed the pipeline installation portion of this project and the repair of the main trunk line that was damaged during the first quarter of 2007. The Company is currently completing the remaining work on the last part of the project.
David Sharp, President and Chief Executive Officer of Horizon Offshore, Inc. said, "We are very pleased with this quarter's results. Successful execution of a number of domestic projects as well as a project in Mexico enabled us to overcome subcontractor disappointments in Mexico on our Pemex projects and in West Africa. Our employees remain committed to superior project execution to serve the needs of our clients."
The Company will not be conducting a conference call with investors for the third quarter results due to its pending merger with Cal Dive International, Inc.
About Horizon Offshore, Inc.
Horizon and its subsidiaries provide marine construction services for the offshore oil and gas and energy industries. The Company's fleet is used to perform a wide range of marine construction activities, including installation and repair of marine pipelines to transport oil and gas and other sub sea production systems, and the installation and abandonment of production platforms.
The Horizon Offshore logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=760
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which represent the Company's expectations and beliefs concerning future events that involve risks and uncertainties which could cause actual results to differ materially from those currently anticipated. All statements other than statements of historical facts included in this release are forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include the factors described from time to time in the Company's filings with the Securities and Exchange Commission. Consequently, all of the forward-looking statements made in this press release are qualified by these and other factors, risks, and uncertainties.
Actual events, circumstances, effects and results may be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Consequently, the forward-looking statements often identified with words like "should," "expects," "believes," "anticipates," "may," "could," etc., contained herein should not be regarded as representations by Horizon or any other person that the projected outcomes can or will be achieved.
Comparative Tables Follow:
Horizon Offshore, Inc.
Income Statement Data
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
--------------------------------------
Income Statement Data:
Contract revenues $147,778 $143,733 $351,844 $430,618
Cost of contract
revenues 111,236 104,603 301,194 313,811
-------- -------- -------- --------
Gross profit 36,542 39,130 50,650 116,807
Selling, general and
administrative
expenses 7,915 8,318 24,011 25,641
Gain on insurance
settlement -- -- -- (14,300)
Reserve for claims and
receivables -- -- -- 18,458
-------- -------- -------- --------
Operating income 28,627 30,812 26,639 87,008
Other:
Interest expense (2,816) (3,146) (8,521) (10,771)
Interest income 886 894 2,654 1,686
Loss on debt
extinguishment -- -- -- (2,402)
Other income
(expense), net (50) 395 (35) 358
-------- -------- -------- --------
Income before income
taxes 26,647 28,955 20,737 75,879
Income tax provision 7,773 8,089 5,829 22,672
-------- -------- -------- --------
Net income $ 18,874 $ 20,866 $ 14,908 $ 53,207
======== ======== ======== ========
Earnings per share:
Net income per share
- basic $ 0.59 $ 0.66 $ 0.47 $ 1.75
======== ======== ======== ========
Net income per share
- diluted $ 0.58 $ 0.64 $ 0.46 $ 1.72
======== ======== ======== ========
Weighted average shares
used in computing
earnings per share:
Basic 32,169 31,814 32,004 30,334
Diluted 32,388 32,370 32,132 30,882
Other Non-GAAP Financial Data:
Adjusted EBITDA(1) $ 36,374 $ 40,520 $ 48,135 $ 99,843
Adjusted EBITDA
calculation is as
follows:
Net income $ 18,874 $ 20,866 $ 14,908 $ 53,207
Income tax provision 7,773 8,089 5,829 22,672
Net interest expense 1,930 2,252 5,867 9,085
Depreciation and
amortization 6,941 7,067 18,570 20,101
Stock-based
compensation 856 2,246 2,961 6,676
Loss on debt
extinguishment -- -- -- 2,402
Gain on insurance
settlement -- -- -- (14,300)
-------- -------- -------- --------
Adjusted EBITDA $ 36,374 $ 40,520 $ 48,135 $ 99,843
1) Horizon calculates Adjusted EBITDA (adjusted earnings before
interest, taxes, depreciation and amortization) as net income
excluding income taxes, net interest expense, depreciation and
amortization, and adjusted for stock-based compensation, loss on
debt extinguishment and gain on insurance settlement. Adjusted
EBITDA is not calculated in accordance with Generally Accepted
Accounting Principles (GAAP), but is a non-GAAP measure that is
derived from items in Horizon's GAAP financials and is used as a
measure of operational performance. Management references this
non-GAAP financial measure frequently in its decision-making
because it provides supplemental information that facilitates
internal comparisons to historical operating performance of prior
periods and external comparisons to competitors' historical
operating performance. Horizon also has aligned the disclosure of
Adjusted EBITDA with the financial covenants in its material
credit agreements with various lenders, which include ratios
requiring a determination of EBITDA, as defined. Adjusted EBITDA
is a material component of the financial covenants in Horizon's
credit agreements and non-compliance with the covenants could
result in the acceleration of indebtedness. Horizon believes
Adjusted EBITDA is a commonly applied measurement of financial
performance by investors. Horizon believes Adjusted EBITDA is
useful to investors because it gives a measure of operational
performance without taking into account items that Horizon does
not believe relate directly to operations or that are subject to
variations that are not caused by operational performance. This
non-GAAP measure is not intended to be a substitute for GAAP
measures, and investors are advised to review this non-GAAP
measure in conjunction with GAAP information provided by Horizon.
Adjusted EBITDA should not be construed as a substitute for
income from operations, net income or cash flows from operating
activities (all determined in accordance with GAAP) for the
purpose of analyzing Horizon's operating performance, financial
position and cash flows. Horizon's computation of Adjusted EBITDA
may not be comparable to similar titled measures of other
companies. A reconciliation of this non-GAAP measure to Horizon's
net income is included.
Horizon Offshore, Inc.
Balance Sheet Data
(Unaudited)
(In thousands)
September 30 December 31,
2007 2006
---- ----
Cash and cash equivalents and
short-term investments $100,379 $96,890
Working capital 203,314 204,523
Total assets 549,038 523,019
Total debt 103,635 114,212
Total stockholders' equity 312,710 297,335